Tag Archives: Elon Musk

The Twitter Files and Political Exploitation of Social Media

07 Wednesday Dec 2022

Posted by in Censorship, Regulation, Social Media

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I’ve been cheering for Elon Musk in his effort to remake Twitter into the kind of “public square” it always held the promise to be. He’s standing up for free expression, against one-party control of speech on social media, and especially against government efforts to control speech. That’s a great and significant thing, yet as Duke economist Michael Munger notes, we hear calls from the Biden Administration and congressional Democrats to “keep an eye on Twitter”, a not-so-veiled threat of future investigative actions or worse.

Your Worst Enemy Test, Public or Private

As a disclaimer, I submit that I’m not an unadulterated fan of Musk’s business ventures. His business models too often leverage wrong-headed government policy for profitability. It reeks of rent seeking behavior, whatever Musk’s ideals, and the availability of those rents, primarily subsidies, violates the test for good governance I discussed in my last post. That’s the Munger Test (the “Your Worst Enemy” Test), formally:

“You can only give the State power that you favor giving to your worst enemy.”

On the other hand, Musk’s release of the “Twitter Files” last weekend, with more to come, is certainly a refreshing development. Censorship at the behest of political organizations, foreign governments, or our own government are all controversial and possibly illegal. While we’d ordinarily hope to transact privately at arms length with free exchange being strictly an economic proposition, one might even apply the Munger Test to the perspective of a user of a social media platform: would you trust your worst enemy to exercise censorship on that platform on the basis of politics? Like Donald Trump? Or Chuck Schumer? If not, then you probably won’t be happy there! Now, add to that your worst enemy’s immunity to prosecution for any content they deem favorable!

Cloaked Government Censorship?

Censorship runs afoul of the First Amendment if government actors are involved. In an interesting twist in the case of the Twitter Files, the two independent journalists working with the files, Matt Taibbi and Bari Weiss, learned that some of the information had been redacted by one James Baker, Twitter’s Deputy General Counsel. Perhaps not coincidentally, Baker was also formerly General Counsel of the FBI and a key figure in the Trump-Russia investigation. Musk promptly fired Baker from Twitter over the weekend. We might see, very soon, just how coincidental Baker’s redactions were.

Mark Zuckerberg himself recently admitted that Facebook was pressured by the FBI to censor the Hunter Biden laptop story, which is a key part of the controversy underlying the Twitter Files. The Biden Administration had ambitious plans for working alongside social media on content moderation, but the Orwellian-sounding “Disinformation Governance Board” has been shelved, at least for now. Furthermore, activity performed for a political campaign may represent an impermissible in-kind campaign donation, and Twitter falsely denied to the FEC that it had worked with the Biden campaign.

Solutions?

What remedies exist for potential social media abuses of constitutionally-protected rights, or even politically-driven censorship? Elon Musk’s remaking of Twitter is a big win, of course, and market solutions now seem more realistic. Court challenges to social media firms are also possible, but there are statutory obstacles. Court challenges to the federal government are more likely to succeed (if its involvement can be proven).

The big social media firms have all adopted a fairly definitive political stance and have acted on it ruthlessly, contrary to their professed role in the provision of an open “public square”. For that reason, I have in the past supported eliminating social media’s immunity from prosecution for content posted on their networks. A cryptic jest by Musk might just refer to that very prospect:

“Anything anyone says will be used against me in a court of law.”

Or maybe not … even with the sort of immunity granted to social media platforms, the Twitter Files might implicate his own company in potential violations of law, and he seems to be okay with that.

Immunity was granted to social media platforms under Section 230 of the Communications Decency Act (DCA). It was something many thought “the state should do” in the 1990s in order to foster growth in the internet. And it would seem that a platform’s immunity for content shared broadly should be consistent with promoting free speech. So the issue of revoking immunity is thorny for free speech advocates.

Section 230 And Content Moderation

There have always been legal restrictions on speech related to libel and “fighting words”. In addition, the CDA, which is a part of the Telecommunications Act, restricts “obscene” or “offensive” speech and content in various ways. The problem is that social media firms seem to have used the CDA as a pretext for censoring content more generally. It’s also possible they felt as if immunity from liability made them legally impervious to objections of any sort, including aggressive political censorship and user bans on behalf of government.

The social value of granting immunity depends on the context. There are two different kinds of immunity under Section 230: subsection (c)(1) grants immunity to so-called common carriers (e.g. telephone companies) for the content of private messages or calls on their networks; subsection (c)(2) grants immunity to social media companies for content posted on their platforms as long as those companies engage in content moderation consistent with the provisions of the CDA.

Common carrier immunity is comparatively noncontroversial, but with respect to 230(c)(2), I go back to the question: would I want my worst enemy to have the power to grant this kind of immunity? Not if it meant the power to forgive political manipulation of social media content with the heavy involvement of one political party! The right to ban users is completely unlike the “must serve” legal treatment of “public accommodations” provided by most private businesses. And immunity is inconsistent with other policies. For example, if social media acts to systematically host and to amplify some viewpoints and suppress others, it suggests that they are behaving more like publishers, who are liable for material they might publish, whether produced on their own or by third-party contributors.

Still, social media firms are private companies and their user agreements generally allow them to take down content for any reason. And if content moderation decisions are colored by input from one side of the political aisle, that is within the rights of a private firm (unless its actions are held to be illegal in-kind contributions to a political campaign). Likewise, it is every consumer’s right not to join such a platform, and today there are a number of alternatives to Twitter and Facebook.

Again, political censorship exercised privately is not the worst of it. There are indications that government actors have been complicit in censorship decisions made by social media. That would be a clear violation of the First Amendment for which immunity should be out of the question. I’d probably cut a platform considerable slack, however, if they acted under threat of retaliation by government actors, if that could be proven.

Volokh’s Quid Pro Quo

Rather than simply stripping away Section 230 protection for social media firms, another solution has been suggested by Eugene Volokh in “Common Carrier Status as Quid Pro Quo for § 230(c)(1) Immunity”. He proposes the following choice for these companies:

“(1) Be common carriers like phone companies, immune from liability but also required to host all viewpoints, or

(2) be distributors like bookstores, free to pick and choose what to host but subject to liability (at least on a notice-and-takedown basis).”

Option 2 is the very solution discussed in the last section (revoke immunity). Option 1, however, would impinge on a private company’s right to moderate content in exchange for continued immunity. Said differently, the quid pro quo offers continued rents created by immunity in exchange for status as a public utility of sorts, along with limits on the private right to moderate content. Common carriers often face other regulatory rules that bear on pricing and profits, but since basic service on social media is usually free, this is probably not at issue for the time being.

Does Volokh’s quid pro quo pass the Munger Test? Well, at least it’s a choice! For social media firms to host all viewpoints isn’t nearly as draconian as the universal service obligation imposed on local phone companies and other utilities, because the marginal cost of hosting an extra social media user is negligible.

Would I give my worst enemy the power to impose this choice? The CDA would still obligate social media firms selecting Option 1 to censor obscene or offensive content. Option 2 carries greater legal risks to firms, who might respond by exercising more aggressive content moderation. The coexistence of common carriers and more content-selective hosts might create competitive pressures for restrained content moderation (within the limits of the CDA) and a better balance for users. Therefore, Volokh’s quid pro quo option seems reasonable. The only downside is whether government might interfere with social media common carriers’ future profitability or plans to price user services. Then again, if a firm could reverse its choice at some point, that might address the concern. The CDA itself might not have passed the “Worst Enemy” Munger Test, but at least within the context of established law, I think Volokh’s quid pro quo probably does.

We’ll Know More Soon

More will be revealed as new “episodes” of the Twitter Files are released. We may well hear direct evidence of government involvement in censorship decisions. If so, it will be interesting to see the fallout in terms of legal actions against government censorship, and whether support coalesces around changes in the social media regulatory environment.

Government Action and the “Your Worst Enemy” Test

03 Saturday Dec 2022

Posted by in Big Government, Censorship

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A couple of weeks back I posted an admittedly partial list of the disadvantages, dysfunctions, and dangers of the Big Government Mess seemingly wished upon us by so many otherwise reasonable people. A wise addition to that line of thinking is the so-called Munger Test articulated by Michael Munger of Duke University. Here, he applies the test to government involvement in social media content regulation:

“If someone says “The STATE should do X” (in this case, decide what is true and what can be published in a privately-owned space), they need to make a substitution.

Instead of “The STATE” substitute “Donald Trump,” and see if you still belief it. (Or “Nancy Pelosi”, if you want).”

If approached honestly, Munger’s test is sure to make a partisan think twice about having government “do something”, or do anything! In a another tweet, Munger elaborates on the case of Twitter, which is highly topical at the moment:

“In fact, the reporters and media moguls who are calling for the state to hammer Twitter, and censor all those other ‘liars’, naively believe that they have a 1000 Year Reich.

You don’t. 𝙔𝙤𝙪 𝙘𝙖𝙣 𝙤𝙣𝙡𝙮 𝙜𝙞𝙫𝙚 𝙩𝙝𝙚 𝙎𝙩𝙖𝙩𝙚 𝙥𝙤𝙬𝙚𝙧𝙨 𝙩𝙝𝙖𝙩 𝙮𝙤𝙪 𝙛𝙖𝙫𝙤𝙧 𝙜𝙞𝙫𝙞𝙣𝙜 𝙩𝙤 𝙮𝙤𝙪𝙧 𝙬𝙤𝙧𝙨𝙩 𝙚𝙣𝙚𝙢𝙮. Deal with it.”

The second sentence in that last paragraph is an even more concise statement of the general principle behind the Munger Test, which we might dub the “Worst Enemy Test” with no disrespect to Munger. He proposed the test (immodestly named, he admits) in his 2014 article, “Unicorn Governance”, in which he offered a few other examples of its application. The article is subtitled:

“Ever argued public policy with people whose State is in fantasyland?”

The answer for me is yes, almost every time I talk to anyone about public policy! And as Munger says, that’s because:

“Everybody imagines that ‘The STATE’ is smart people who agree with them. Once MY team controls the state, order will be restored to the Force.”

So go ahead! Munger-test all your friends’ favorite policy positions the next time you talk!

But what about the case of “regulating” Twitter or somehow interfering with its approach to content moderation? More on that in my next post.

The Pernicious COVID PCR Test: Ditch It or Fix It

02 Wednesday Dec 2020

Posted by in Coronavirus, Public Health

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We have a false-positive problem and even the New York Times noticed! The number of active COVID cases has been vastly exaggerated and still is, but there is more than one fix.

COVID PCR tests, which are designed to detect coronavirus RNA from a nasal swab, have a “specificity” of about 97%, and perhaps much less in the field. That means at least 3% of tests on uninfected subjects are falsely positive. But the total number of false positive tests can be as large or larger than the total number of true positives identified. Let’s say 3% of the tested population is truly infected. Then out of every 100 individuals tested, three individuals are actively infected and 97 are not. Yet about 3 of those 97 will test positive anyway! So in this example, for every true infection identified, the test also falsely flags an uninfected individual. The number of active infections is exaggerated by 100%.

But again, it’s suspected to be much worse than that. The specificity of PCR tests depends on the number of DNA replications, or amplification cycles, to which a test sample is subjected. That process is illustrated through three cycles in the graphic above. It’s generally thought that 20 – 30 cycles is sufficient to pick-up DNA from a live virus infection. If a sample is subjected to more than 30 cycles, the likelihood that the test will detect insignificant dead fragments of the virus is increased. More than 35 cycles prompts real concern about the test’s reliability. But in the U.S., PCR tests are regularly subjected to upwards of 35 and even 40-plus cycles of amplification. This means the number of active cases is exaggerated, perhaps by several times. If you don’t believe me, just ask the great Dr. Anthony Fauci:

“It’s very frustrating for the patients as well as for the physicians … somebody comes in, and they repeat their PCR, and it’s like [a] 37 cycle threshold, but you almost never can culture virus from a 37 threshold cycle. So, I think if somebody does come in with 37, 38, even 36, you got to say, you know, it’s just dead nucleotides, period.“

Remember, the purpose of the test is to find active infections, but the window during which most COVID infections are active is fairly narrow, only for 10 – 15 days after the onset of symptoms, and often less; those individuals are infectious to others only up to about 10 days, and most tests lag behind the onset of symptoms. In fact, infected but asymptomatic individuals — a third or more of all those truly infected at any given time — are minimally infectious, if at all. So the window over which the test should be sensitive is fairly narrow, and many active infections are not infectious at all.

PCR tests are subject to a variety of other criticisms. Many of those are discussed in this external peer-review report on an early 2020 publication favorable to the tests. In addition to the many practical shortfalls of the test, the authors of the original paper are cited for conflicts of interest. And the original paper was accepted within 24 hours of submission to the journal Eurosurveillance (what a name!), which should raise eyebrows to anyone familiar with a typical journal review process.

The most obvious implication of all the false positives is that the COVID case numbers are exaggerated. The media and even public health officials have been very slow to catch onto this fact. As a result, their reaction has sown a panic among the public that active case numbers are spiraling out of control. In addition, false positives lead directly to mis-attribution of death: the CDC changed it’s guidelines in early April for attributing death to COVID (and only for COVID, not other causes of death). This, along with the vast increase in testing, means that false positives have led to an exaggeration of COVID as a cause of death. Even worse, false positives absorb scarce medical resources, as patients diagnosed with COVID require a high level of staffing and precaution, and the staff often requires isolation themselves.

Many have heard that Elon Musk tested positive twice in one day, and tested negative twice in the same day! The uncomfortable reality of a faulty test was recently recognized by an Appeals Court in Portugal, and we may see more litigation of this kind. The Court ruled in favor of four German tourists who were quarantined all summer after one of them tested positive. The Court said:

“In view of current scientific evidence, this test shows itself to be unable to determine beyond reasonable doubt that such positivity corresponds, in fact, to the infection of a person by the SARS-CoV-2 virus.” 

I don’t believe testing is a bad thing. The existence of diagnostic tests cannot be a bad thing. In fact, I have advocated for fast, cheap tests, even at the sacrifice of accuracy, so that individuals can test themselves at home repeatedly, if necessary. And fast, cheap tests exist, if only they would be approved by the FDA. Positive tests should always be followed-up immediately by additional testing, whether those are additional PCR tests, other molecular tests, or antigen tests. And as Brown University epidemiologist Andrew Bostom says, you should always ask for the cycle threshold used when you receive a positive result on a PCR test. If it’s above 30 and you feel okay, the test is probably not meaningful.

PCR tests are not ideal because repeat testing is time consuming and expensive, but PCR tests could be much better if the number of replication cycles was reduced to somewhere between 20 and 30. Like most flu and SARS viruses, COVID-19 is very dangerous to the aged and sick, so our resources should be focused on their safety. However, exaggerated case counts are a cause of unnecessary hysteria and cost, especially for a virus that is rather benign to most people.

HyperBoondoggle

06 Wednesday Nov 2019

Posted by in infrastructure

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The hyperloop: if you think the Delmar Loop Trolley in St. Louis, MO was a boondoggle, just wait till the state starts hemorrhaging cash for the proposed hyperloop test track, and later a possible route connecting St. Louis, Columbia, and Kansas City. The hyperloop would rely on magnetic levitation (maglev) technology that has been used for trains in some parts of the world, though always on relatively short routes. For a hyperloop, however, the maglev system keeps carrier “pods” suspended in a near-vacuum tube extending the length of the route, eliminating friction and air resistance. Proponents say the pods will move at top speeds of 700 miles an hour, traversing the state in about 30 minutes. And they say it will be a very green machine.

Richard Branson’s Virgin Hyperloop One wants to build the 15-mile test track, which is projected to cost $300 – $500 million. That range is centered just a bit higher than the cost of the Loop Trolley on a per-mile basis, and for a project with major technological uncertainties, that leaves me just a bit wary. The 250-mile cross-state route is now pegged at between $7.3 and $10.4 billion, according to the recent report issued by the state’s “Blue-Ribbon Panel on Hyperloop”. It’s likely to cost much more by the time they get around to building it, if they do at all, and if it actually works.

Hyperbole?

My skepticism about hyperloops is based in part on the hucksterism that often characterizes appeals for public funding of large projects, and hyperloop hucksterism has already taken place. For example, in 2013 Elon Musk estimated that a Hyperloop system would cost about $11.5 million per mile. By 2016, the mid-point estimate for a route in the San Francisco Bay Area was over $100 million per mile. A friendlier route in Dubai is expected to cost $52 million per mile. So to be conservative, we saw 5x to 10x higher costs in a matter of three years. But now, Virgin One says it can construct a route in Missouri for less than the per-mile cost of the Dubai line. Well, the state Department of Transportation already owns the rights of way over significant stretches of the route (but not everywhere because the tube must be straighter than the highway).

The hyperbolic claims for hyperloop technology include speed, projected passenger fares, and ridership. According to Innovation Origins, the so-called feasibility study for the Missouri hyperloop did not assess the technology or even address the fact that no working hyperloop has ever been built or proven at full scale over any distance longer than a kilometer or so. The consultants who prepared the “study” merely assumed it would work. No test pod within a vacuum tube has achieved more than a fraction of the promised speed. The tubes were not long enough to achieve top speeds, they say, but that raises another issue: creating near-vacuum conditions in a sizable tube over very long distances. At the Innovation Origin link above, they estimate that the Missouri tube would occupy over 1 million cubic meters of space, which is at least 30 times larger than the most expansive man-made vacuum space now in existence.

The Ride

As for the passenger experience, 30 minutes to traverse the state of Missouri would be impressive, but what about comfort? First, expanding the tube’s circumference and the girth of the pods would have a disproportionate impact on cost, so conditions might either be more cramped than the promotional photos would have you believe, or the number of passenger seats per pod might be reduced. Second, rapid acceleration from zero to 700 mph would subject humans to fairly large G-forces over several minutes. Deceleration at the end of the trip might be even worse. Negotiating even mild curves would also require reduced speed and subsequent re-acceleration to avoid uncomfortably high radial G-forces. All that means the ride could be a bit uncomfortable. That also means the average speed between Kansas City and St. Louis would be significantly less than 700 mph, especially with a stop in Columbia. G-forces might not be much of a concern for freight traffic, unless it’s fresh produce.

Safety

Then there’s the vulnerability of the system. Willis Eschenbach goes into detail on some technical problems that make the hyperloop risky, such as the pressure on the tubes themselves. It would be about 20,000 pounds per square meter of tube surface, all subject to significant thermal expansion and contraction over the course of a day, with large pods racing through joints and rounding curves. Any fault or crack at any point in the tube surface would cause catastrophic deceleration of pods along the entire length of the tube. The integrity of the pressurized pods themselves is also a safety issue. And what about an earthquake? Or a loss of control and fiery pile-up of vehicles traveling on I-70 near the tubes. Or any number of other foolish or intentional sources of damage to the tube along its route?

Throughput

One of Eschenbach’s most interesting critiques has to do with passenger throughput. Musk’s original plan called for 28-passenger pods departing every 30 seconds: 3,300 passengers per hour. That would represent a substantial addition to total cross-state transportation capacity. At full utilization (which of course is unlikely), that would exceed current estimated totals for daily travel between St. Louis, Columbia, and Kansas City. And while that capacity might reduce pressure to expand other modes, such as adding an extra lane to I-70, it would not offer an excuse to eliminate highway, rail, or airport infrastructure, nor would it eliminate the need to maintain it.

Musks’s assumption might be too optimistic, however: for safety, the time between pod departures might have to be longer. than 30 seconds. Eschenbach asserts 80 that seconds would be more reasonable, which would slash capacity by about 60% relative to Musk’s estimate. And that doesn’t account for potential bottlenecks at stops where pods must be depressurized and repressurized. And if substantially heavier freight pods are intermingled with passenger pods, as anticipated, the required intervals between departures might have to be longer.

Economics

Few large transportation projects are self-funding. Typically, user fees fail to cover operating costs, let alone capital costs. The projected fares quoted by proponents of the Missouri hyperloop are low: “cheaper than the price of gas to drive” cross-state. Perhaps we could say about $25, based on that statement. That won’t make much of a dent in the cost of construction.

The hyperloop’s economic viability for freight traffic is questionable as well, though freight traffic seems to be a fallback position among boosters when confronted with the uncertainties of passenger travel via hyperloop. The Blue-Ribbon report says the expected cost of freight via hyperloop might range from $1.40 per mile to $2.80 on the high end, putting the mid-point well above the $1.69 per mile average cost of shipping by truck. Will speed make the hyperloop a competitive alternative for shippers? In fact, freight via hyperloop might be much worse than rail or truck in solving the “last mile” problem. That’s because the speeds that are its presumed advantage also mean fewer terminals are possible. The system would have to rely as heavily on integration with other modes of transportation as any other form of long-distance carriage, and perhaps more.

The last-mile problem eats into hyperloop’s presumed environmental advantages, which are not as clear cut as its enthusiasts would have you believe. Maintaining a vacuum in a gargantuan tube will not be a low-energy proposition, nor will powering the magnetic levitation/propulsion system, with or without a vacuum. Pressurized, climate-controlled pods will require still more power, and that’s to say nothing of the energy required to fabricate one-inch thick steel cylinders, huge magnets, and the rest of the support infrastructure. Reassurances that hyperloop will be powered exclusively by “green” technologies should be taken with a grain of salt. 

Virginia Postrel believes that regulation might be the biggest threat to the success of hyperloop, though she seems a bit optimistic about the actual economics of the technology. Safety will be a major concern for regulators. The technology will be subject to common carrier rules, and there will be other hurdles at the federal, state and local levels. And what of the health effects of prolonged exposure to those powerful magnetic forces? They may be insignificant, but the question will come up and possibly litigated.

Conclusion

A hyperloop cannot be built and operated without a significant and ongoing investment of public funds. The hoped-for public-private partnership needed to build the system would require major investors, and brave investors. Promoters say the project is not unlike efforts to build the railroads in the 19th century, which must have seemed like a daunting task at the time, and one involving huge financial risk. Fair enough, but the railroads stood to benefit in that age from a huge pent-up desire to exploit distant resources. The Missouri hyperloop is not quite comparable in that respect. It might be attractive mainly as a novelty, much like the Loop Trolley. Moreover, it didn’t take long for the railroads to become desperate rent-seekers, unable to profit from their heavily-subsidized investments without further public intervention on their behalf.

The hyperloop is a truly seductive idea. It’s the sort of thing that even small government types find irresistible, but there is little doubt that taxpayers will pay dearly. It’s not clear to me that the project will create meaningful social benefits or address compelling social risks. Therefore, let’s be cautious about making huge public commitments until this technology is farther along in development and the benefits can be estimated with greater certainty.

The Fast Trains That Can’t

17 Sunday Feb 2019

Posted by in Air Travel, infrastructure

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High-speed rail will remain a pipe-dream in the U.S. except for the development of a few limited routes. However, statists continue to push for large-scale adoption. That would represent a triumph of big government, if realized, and it is very appealing to the public imagination. But high-speed rail (HSR) is something of a fraud. Projected fares do not include the massive capital costs required to build it, which must be funded by taxpayers. Like most big public projects, HSR presents ample opportunities for graft by privileged insiders. And apparently it’s easy to rationalize HSR by repeating the questionable mantra that it is environmentally superior to autos or even air travel.

California recently confronted the harsh reality of HSR costs by scaling back its ambitious plans to a single line traversing a portion of the central valley. Now, the federal government has acknowledged that the state has violated the terms of past federal grants, essentially for non-performance. Those grants totaled $2.5 billion, and another grant of almost $1 billion might be withheld. Better not to throw good money after bad.

Megan McArdle wisely debunks the viability of HSR in the U.S. based on four potent factors: distance, wealth, legal obstacles, and cost. Unlike Europe, Japan and even the eastern Chinese seaboard, the distances involved in the U.S. make widespread development of HSR infrastructure quite challenging. Even on shorter routes, the U.S. has too much valuable property in and between population centers that would have to be repurposed for placement of relatively straight-line routes to facilitate high speeds. An authoritarian government can commandeer property, but wresting property from private owners in the U.S. is not straightforward, even when obtrusive bureaucrats attempt to invoke eminent domain. McArdle says:

“… the U.S. legal system offers citizens an unparalleled number of veto points at which they can attempt to block government projects. Any infrastructure project bigger than painting a schoolhouse thus has to either fight out the reviews and court cases for years, or buy off the opponents, or more likely, both.”

Another downside for HSR: the cost of installing and operating U.S. infrastructure is inflated by a number of factors, including high U.S. wage levels, unions, overlapping regulatory agencies, and the distances and other cost factors discussed earlier. Even worse, the extensive planning and lengthy time lines of such a project virtually assure cost overruns, as California has learned the hard way. So high-speed rail has a lot going against it.

Warren Meyer raises another issue: rail in the U.S. is dominated by freight, and it is very difficult for freight and passenger traffic to share the same system. That means freight traffic cannot be used to help defray the cost of installing HSR. Meyer makes an interesting comparison between the efficiency of passenger trains relative to freight: much more energy is needed to pull a heavy passenger train car than to pull the actual passengers inside. In contrast, the cargo inside a typical freight car weighs far more than the car itself. But the efficiency of freight transportation in the U.S. seems to have no allure for many critics of U.S. transportation policy.

“Freight is boring and un-sexy. Its not a government function in the US. So intellectuals tend to ignore it, even though it is the far more important, from and energy and environmental standpoint, portion of transport to put on the rails. … We have had huge revolutions in transportation over the last decades during the same period that European nations were sinking billions of dollars into pretty high-speed passenger rails systems for wealthy business travelers.”   

Comparisons of efficiency across modes of passenger transportation are typically limited to operating costs, including energy costs, per passenger mile. That narrow focus yields a distorted view of the relative advantages of different passenger modes. In particular, the massive incremental capital costs of HSR are often ignored. Moreover, weight must be assigned to the very real economic costs of passenger time, not to mention the external costs imposed on the viability of farmland, nearby property owners, and wildlife.

In the long-term, all modes of transportation have infrastructure costs, but HSR lines don’t yet exist in this country. It is therefore relevant to ask whether the cost comparison is intended to address an ongoing transportation need or an incremental need. HSR is often promoted as a replacement for other modes of transportation, so the lack of an installed base of infrastructure is a huge incremental cost relative to modes already in place.

Air travel has some obvious advantages over high-speed trains. First, it requires much less support infrastructure, and a significant base of that capital is already installed. Again, the massive, up-front infrastructure costs of HSR are incremental. Also, airports tend to be well-integrated with local transportation options. New passenger train terminals would require additional investment in local ground transportation such as light rail or subway extensions, highway access, and the like. In addition, planes require less passenger time than trains over lengthy routes.

How about autos vs. HSR? Autos have the pre-installed base of road infrastructure. They provide hard-to-value flexibility for the traveler as well, but parking costs must be dealt with, and cars have extremely high accident rates. Travel time is a disadvantage for autos relative to HSR, even at moderate distances. In terms of operating costs, however, autos are not necessarily at a disadvantage: they weigh much less per passenger than trains, but that advantage is offset by trains’ low “rolling resistance” and other factors. The best choice for travelers would vary with the value they place on their time, specific plans at the destination, preference for flexibility, and the operating costs of their vehicle relative to the high-speed train fare.

Supporters of HSR contend that it is less costly to the environment than other modes of transportation. That case is easier to make if you focus solely on operating costs and exclude the impact of generating the electricity needed to power trains, which will require emissions of greenhouse gases for many years to come. A second fundamental omission is the environmental cost of the rail infrastructure itself. It’s very existence is disruptive to local environments, but perhaps most importantly, producing and installing the steel, concrete, and other materials needed for HSR will carry a steep environmental cost.

HSR is unlikely to achieve widespread adoption in the U.S. The distances of many routes and high infrastructure costs are obstacles that will be nearly impossible to overcome. Projected fares would be outrageously high were they to cover the full cost of the infrastructure. A typical argument is that taxpayers should fund the infrastructure due to the social benefits that rail is presumed to confer, but that presumption is far-fetched given the impact of producing the infrastructure itself, as well as the power needed to run the trains. I don’t expect adherents of rail to put aside their dreams quickly, however: there is something so romantic about the notion of having the state provide a massive rail network that the idea will never die the death it deserves. And don’t be fooled by Elon Musk’s hyperloop. It remains a distant technological hope and it too will have enormous resource costs along with an attendant call for public subsidies (a call which has already begun). After all, public subsidies are a hallmark of most of Musk’s business ventures.

 

 

The Comparative Human Advantage

10 Thursday Aug 2017

Posted by in Automation, Technology, Tradeoffs

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There are so many talented individuals in this world, people who can do many things well. In fact, they can probably do everything better than most other people in an absolute sense. In other words, they can produce more of everything at a given cost than most others. Yet amazingly, they still find it advantageous to trade with others. How can that be?

It is due to the law of comparative advantage, one of the most important lessons in economics. It’s why we specialize and trade with others for almost all of ours needs and wants, even if we are capable of doing all things better than them. Here’s a simple numerical example… don’t bail out on me (!):

  • Let’s say that you can produce either 1,000 bushels of barley or 500 bushels of hops in a year, or any combination of the two in those proportions. Each extra bushel of hops you produce involves the sacrifice of two bushels of barley.
  • Suppose that I can produce only 500 bushels of barley and 400 bushels of hops in a year, or any combination in those proportions. It costs me only 1.25 bushels of barley to produce an extra bushel of hops.
  • You can produce more hops than I can, but hops are costlier for you at the margin: 2 bushels of barley to get an extra bushel of hops, more than the 1.25 bushels it costs me.
  • That means you can probably obtain a better combination (for you) of barley and hops by specializing in barley and trading some of it to me for hops. You don’t have to do everything yourself. It’s just not in your self-interest even if you have an absolute advantage over me in everything!

This is not a coincidental outcome. Exploiting opportunities for trade with those who face lower marginal costs effectively increases our real income. In production, we tend to specialize — to do what we do — because we have a comparative advantage. We specialize because our costs are lower at the margin in those activities. And that’s also what motivates trade with others. That’s why nations should trade with others. And, as I mentioned about one week ago here, that’s why we have less to fear from automation than many assume.

Certain tasks will be automated as increasingly productive “robots” (or their equivalents) justify the costs of the resources required to produce and deploy them. This process will be accelerated to the extent that government makes it appear as if robots have a comparative advantage over humans via minimum wage laws and other labor market regulations. As a general rule, employment will be less vulnerable to automation if wages are flexible. 

What if one day, as Elon Musk has asserted, robots can do everything better than us? Will humans have anywhere to work? Yes, if human labor is less costly at the margin. Once deployed, a robot in any application has other potential uses, and even a robot has just 24 hours in a day. Diverting a robot into another line of production involves the sacrifice of its original purpose. There will always be uses in which human labor is less costly at the margin, even with lower absolute productivity, than repurposing a robot or the resources needed to produce a new robot. That’s comparative advantage! That will be true for many of the familiar roles we have today, to say nothing of the unimagined new roles for humans that more advanced technology will bring.

Some have convinced themselves that a fully-automated economy will bring an end to scarcity itself. Were that to occur, there would be no tradeoffs except one kind: how you use your time (barring immortality). Superabundance would cause the prices of goods and services to fall to zero; real incomes would approach infinity. In fact, income as a concept would become meaningless. Of course, you will still be free to perform whatever “work” you enjoy, physical or mental, as long as you assign it a greater value than leisure at the margin.

Do I believe that superabundance is realistic? Not at all. To appreciate the contradictions inherent in the last paragraph, think only of the scarcity of talented human performers and their creativity. Perhaps people will actually enjoy watching other humans “perform” work. They always have! If the worker’s time has any other value (and it is scarce to them), what can they collect in return for their “performance”? Adulation and pure enjoyment of their “work”? Some other form of payment? Not everything can be free, even in an age of superabundance.

Scarcity will always exist to one extent or another as long as our wants are insatiable and our time is limited. As technology solves essential problems, we turn our attention to higher-order needs and desires, including various forms of risk reduction. These pursuits are likely to be increasingly resource intensive. For example, interplanetary or interstellar travel will be massively expensive, but they are viewed as desirable pursuits precisely because resources are, and will be, scarce. Discussions of the transition of civilizations across the Kardashev scale, from “Type 0” (today’s Earth) up to “Type III” civilizations, capable of harnessing the energy equivalent of the luminosity of its home galaxy, are fundamentally based on presumed efforts to overcome scarcity. Type III is a long way off, at best. The upshot of ongoing scarcity is that opportunity costs of lines of employment will remain positive for both robots and humans, and humans will often have a comparative advantage.

Mr. Musk Often Goes To Washington

31 Monday Jul 2017

Posted by in Automation, Labor Markets, Technology

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Elon Musk says we should be very scared of artificial intelligence (AI). He believes it poses an “existential risk” to humanity and  calls for “proactive regulation” of AI to limit its destructive potential. His argument encompasses “killer robots”: “A.I. & The Art of Machine War” is a good read and is consistent with Musk’s message. Military applications already involve autonomous machine decisions to terminate human life, but the Pentagon is weighing whether decisions to kill should be made only by humans. Musk also focuses on more subtle threats from machine intelligence: It could be used to disrupt power and communication systems, to manipulate human opinion in dangerous ways, and even to sow panic via cascades of “fake robot news”, leading to a breakdown in civil order. Musk has also expressed a fear that AI could have disastrous consequences in commercial applications with runaway competition for resources. He sounds like a businessmen who really dislikes competition! After all, market competition is self-regulating and self-limiting. The most “destructive” effects occur only when competitors come crying to the state for relief!

Several prominent tech leaders and AI experts have disputed Musk’s pessimistic view of AI, including Mark Zuckerberg of Facebook and Eric Schmidt, chairman of Google’s parent company, Alphabet, Inc. Schmidt says:

“My question to you is: don’t you think the humans would notice this, and start turning off the computers? We’d have a race between humans turning off computers, and the AI relocating itself to other computers, in this mad race to the last computer, and we can’t turn it off, and that’s a movie. It’s a movie. The state of the earth currently does not support any of these scenarios.“

Along those lines, Google’s AI lab known as “DeepMind” has developed an AI off-switch, otherwise known as the “big red button“. Obviously, this is based on human supervision of AI processes and on ensuring the interruptibility of AI processes.

Another obvious point is that AI, ideally, would operate under an explicit objective function(s). This is the machine’s “reward system”, as it were. Could that reward system always be linked to human intent? To a highly likely non-negative human assessment of outcomes? Improved well-being? That’s not straightforward in a world of uncertainty, but it is at least clear that a relatively high probability of harm to humans should impose a large negative effect on any intelligent machine’s objective function.

Those kinds of steps can be regarded as regulatory recommendations, which is what Musk has advocated. Musk has outlined a role for regulators as gatekeepers who would review and ensure the safety of any new AI application. Ronald Bailey reveals the big problem with this approach:

“This may sound reasonable. But Musk is, perhaps unknowingly, recommending that AI researchers be saddled with the precautionary principle. According to one definition, that’s ‘the precept that an action should not be taken if the consequences are uncertain and potentially dangerous.’ Or as I have summarized it: ‘Never do anything for the first time.’“

Regulation is the enemy of innovation, and there are many ways in which current and future AI applications can improve human welfare. Musk knows this. He is the consummate innovator and big thinker, but he is also skilled at leveraging the power of government to bring his ideas to fruition. All of his major initiatives, from Tesla to SpaceX, to Hyperloop, battery technology and solar roofing material, have gained viability via subsidies.

But another hallmark of crony capitalists is a willingness to use regulation to their advantage. Could proposed regulation be part of a hidden agenda for Musk? For example, what does Musk mean when he says, “There’s only one AI company that worries me” in the context of dangerous AI? His own company(ies)? Or another? One he does not own?

Musk’s startup OpenAI is a non-profit engaged in developing open-source AI technology. Musk and his partners in this venture argue that widespread, free availability of AI code and applications would prevent malicious use of AI. Musk knows that his companies can use AI to good effect as well as anyone. And he also knows that open-source AI can neutralize potential advantages for competitors like Google and Facebook. Perhaps he hopes that his first-mover advantage in many new industries will lead to entrenched market positions just in time for the AI regulatory agenda to stifle competitive innovation within his business space, providing him with ongoing rents. Well played, cronyman!

Any threat that AI will have catastrophic consequences for humanity is way down the road, if ever. In the meantime, there are multiple efforts underway within the machine learning community (which is not large) to prevent or at least mitigate potential dangers from AI. This is taking place independent of any government action, and so it should remain. That will help to maximize the potential for beneficial innovation.

Musk also asserts that robots will someday be able to do “everything better than us”, thus threatening the ability of the private sector to provide income to individuals across a broad range of society. This is not at all realistic. There are many detailed and nuanced tasks to which robots will not be able to attend without human collaboration. Creativity and the “human touch” will always have value and will always compete in input markets. Even if robots can do everything better than humans someday, an absolute advantage is not determinative. Those who use robot-intensive production process will still find it advantageous to use labor, or to trade with those utilizing more labor-intensive production processes. Such are the proven outcomes of the law of comparative advantage.

Politicians and Infra-Hucksters

05 Thursday Jan 2017

Posted by in Government, infrastructure, Technology

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We’ll soon have a new president and already we’ve heard new promises of infrastructure investment. Once again, a chorus of politicians and pundits decries the woeful state of America’s road, bridges, sewers and airport terminals. Then, there are hosannas in adoration of the economic stimulus and job creation promised by large public works projects. And of course there are proposals to integrate politically-favored technologies with new infrastructure. All three rationales for a publicly-financed infrastructure program are flawed. Our infrastructure is not as inadequate as many believe; it is bad public policy to justify infrastructure decisions on the basis of the construction jobs required; and new infrastructure should not be treated as a vehicle for large-scale deployment of unproven technologies.

Ownership

Much of our nation’s infrastructure is privately owned. This includes, but is not limited to, power generation and the power grid, communication networks, many water systems and sewer systems, most rail lines, some toll roads and bridges, and some river, sea and space ports. Maintenance and upgrades to private facilities, and to some public facilities, depend on the adequacy of the rates or fees charged to users. On the other hand, the quantity and quality of publicly-owned and operated infrastructure is often left up to taxpayers rather than users. Proposals for federal infrastructure investment are largely about these public facilities, but they might also involve subsidies for the development of private infrastructure.

Crisis or Crock?

In a Heritage Foundation research report, Michael Sargent notes that the poor state of the country’s public infrastructure is wildly exaggerated:

“The notion that America’s infrastructure is ‘crumbling’ and in uniquely poor condition is not supported by data. The percentage of the nation’s bridges deemed ‘structurally deficient (not necessarily unsafe, but requiring extensive maintenance) has declined annually since 1990 and now sits at under 10 percent, well under half of what it was 25 years ago. Similarly, analyses of highway pavement quality conclude that the nation’s major roads have been steadily improving in quality and are likely in their best shape ever. Our airports and airways safely move more people and goods than those of any other nation. Overall, the U.S. ranks near the top of G-7 nations for infrastructure quality.“

The usual poster child of the infrastructure “crisis” is the nation’s transportation system, but this report from the Reason Foundation shows that those troubles are something of a myth.

Nevertheless, there are always repairs, maintenance and replacement projects to be considered, as well as possible expansion and new facilities. Infrastructural shortfalls and expansion must be prioritized, but as Sargent emphasizes, an even larger number of projects should and probably would be handled privately if not for burdensome federal regulations. In addition, an irrational mistrust of privately-operated facilities among some segments of the public creates pressure to burden taxpayers with costs, rather than users. Complaints about congestion on roads offer a case in point: the best solutions involve efficient (and positive) pricing of existing capacity, rather than continued expansion of a “free” good. The avoidance of rational solutions like efficient pricing underscores the extent to which demands for increased public investment in infrastructure are driven by hyperbole, rather than sound analysis.

It’s About the Infrastructure, Not the Jobs 

Public infrastructure projects are also pitched as effective engines of economic stimulus and job creation. Both of those claims are questionable. Most importantly, the real rationale for infrastructure investment is the value of the infrastructure itself and the needs it serves going forward. The public expense and the jobs required to produce it are cost items! This point was made recently by economist T. Norman Van Cott, who rightfully asserts that a given output is of greater benefit when its costs are low and when it requires less labor input. (Van Cott’s piece uses the Keystone pipeline as an example, a controversial private project that I find objectionable for its dependence on eminent domain actions.) The sharp distinction between creating value and creating jobs is also made here by Jerry L. Jordon and here by Steven Horowitz. Here is Horowitz:

“Creating jobs is easy; it’s creating value that’s hard. We could create millions of jobs quite easily by destroying every piece of machinery on U.S. farms. The question is whether we are actually better off by creating those jobs—and the answer is a definite no.“

Yet this is how so many infrastructure projects are pitched at the national, state and local levels. It’s also puzzling that economic stimulus is used as a rationale even when the economy is operating near its potential output. Even by the standards of traditional Keynesian economic analysis, that is the wrong time for stimulus. Infrastructure projects should be evaluated on their own merits, not on how many construction workers must be hired, or on how much of their paychecks those workers will spend. Many of them must be bid away from competing projects anyway.

The Public Investment Trough

Here’s a brief anecdote from my own experience with an “advanced” public infrastructure project. Some years ago in the region around my city, St. Louis, Missouri, transportation agencies began to install a network of electronic highway message boards to convey real-time information to drivers on road conditions, congestion, and various public service announcements. The 100+ signs in the area today are connected to operators in a central office via fiber optic cable. This type of system is used elsewhere, and it is partly funded by the federal government.

I seriously question the benefits of this system relative to cost. The signs themselves cost well in excess of $100,000 each. The fiber network is undoubtedly costly, and there are other fixed and variable system costs. The signs have an anachronistic look, vaguely the quality of old high school scoreboards. The information they provide generally adds little to what I already know (“12 minutes to I-270”). The signs are in fixed positions, so the occasional report of an accident or congestion usually comes too late to give motorists decent alternatives. The information the signs provide on road conditions is obvious. Missives such as “buckle up” are of questionable value. Before I depart on a commute, or if I have a passenger, we can consult maps and other apps on cell phones to avail ourselves of far better information. Other, more flexible technologies were outpacing the message boards even before they could be fully deployed, and the boards are still being deployed. This is a project that might have sounded brilliant to highway engineers 20 years ago, but it represented something of a luxury relative to other needs, and it still got funded. Today, it looks like waste.

The politics of infrastructure often means that the enabling legislation gets loaded with poorly-planned projects and shiny jewels to dangle before home constituencies. Legislators are so eager to demonstrate their sophistication that they fall over themselves to approve taxpayer funds for unproven but politically-favored technologies. For example, a recent post by Warren Meyer notes the technical folly of solar roads. These are unlikely to attract much private money because they represent such a monumentally stupid idea. Proponents will go after tax money instead. The same is true of ideas like Elon Musk’s tunnel boring project, for which he hopes to collect massive taxpayer subsidies. Musk claims that tunnels will eliminate road congestion, but efficient pricing would do much to eliminate this problem without tunnels, and other technologies like automated vehicles are likely to reduce congestion by the time Musk over-invests tax money in tunnel-boring equipment, roads and hyper-loops inside tunnels.

In general, taxpayers should be wary of “green infrastructure” proposals. A large number of bike lanes, pedestrian bridges and greenways sound wonderful, but they are serious cost inflators. Federal dollars are regularly squandered on charming but wasteful projects such as trolleys. Even worse are ongoing efforts to subsidize the construction of high-speed rail systems. All of these bright ideas should be resisted.

Let’s Be Rational

The country certainly has infrastructural needs, but claims that we face a crisis are greatly exaggerated. With a new administration and what are likely to be supporting majorities in both houses of Congress, the danger of rushing into big funding commitments is heightened. The sponsors of this kind of legislation will herald massive job creation, but that is incidental to the cost side of the ledger. The benefits of individual projects should be evaluated carefully in comparison to costs. Then they can be prioritized if deemed of sufficient value. Finally, large scale deployment of unproven technologies should be avoided on the public dime.

I haven’t even mentioned one very large infrastructure project that has been proposed by President-Elect Donald Trump: the border wall. I suspect that it would be easier and less expensive to solve the problem of border security using more advanced and flexible technologies, but the permanence and symbolism of a wall appeals to many of Mr. Trump’s supporters. The benefits of a wall in terms of border security and control of immigration flows are difficult if not impossible to evaluate, as are the costs to taxpayers, with Trump promising to extract some form of payment from Mexico. The wall, however, is being “sold” to the American public in emotional terms. Come to think of it, that’s how too many other infrastructure proposals are sold by politicians!

There are promising opportunities to improve the nation’s infrastructure through the private sector, where the value of projects is subject to evaluation by parties who must put “skin in the game”. This will be addressed in my next post.

Capitalism Is The Bounce In Nature’s Rebound

04 Friday Sep 2015

Posted by in Free markets, Human Welfare, Technology

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What forces account for the great shift toward “rewilding” now taking place in our world? Is it green activism and government action? Not from the looks of the photo above, which shows a giant field of solar panels powering an airport in India. Hailed as a great accomplishment by greens, the view from above provides a clue to the absurdity of absorbing vast resources to replace cheap, traditional power sources with politically-favored solar for just a few buildings. Fry the birds, burn the taxpayers! That’s certainly not rewilding, nor will it get us there. Neither will a cluttered landscape of giant, noisy windmills that slice up avian life, provide only intermittent power, and are left to decay once taxpayer subsidies go away.

Rather, the world is returning to nature via many forms of technology, resource productivity and capitalism. How is that possible? Here is a monograph by Jesse H. Ausubel on “rewilding”, the rebound of nature taking place around the globe. It might make you feel more optimistic about prospects for human prosperity and the joint survival of mankind and planet Earth. There is no question that the changes he describes are primarily driven by powerful private incentives. However, Ausubel’s positions are largely technical, not oriented toward a particular social or economic philosophy. He presents compelling graphical evidence and references to support his technical claims. In what follows, I’ll try to summarize some of the most salient points he makes in the report. Some [bracketed comments] in the bullet points are my own thoughts:

  • Land once used in agriculture is being returned to nature as “acreage and yield [have] decoupled. Since about 1940 American farmers have quintupled corn while using the same or even less land.” The same is true in other parts of the world. “The great reversal of land use that I am describing is not only a forecast, it is a present reality in Russia and Poland as well as Pennsylvania and Michigan.” Moreover, there is no cap in sight for farm yields. He credits “precision agriculture, in which we use more bits, not more kilowatts or gallons.“
  • Even more impressive is the fact that “rising yields have not required more tons of fertilizer or other inputs. The inputs to agriculture have plateaued and then fallen, not just cropland but nitrogen, phosphates, potash, and even water.“
  • A tremendous quantity of food is wasted, but Ausubel cites new web-enabled initiatives such as Food Cowboy and CropMobster that hold great promise in rerouting wasted surplus to areas of need. “The 800 million or so hungry humans worldwide are not hungry because of inadequate production.” [Well, production might be inadequate in their vicinity. And “waste” is relative, so to speak. It is typically uneconomic to avoid all wastage, and social pockets of hunger exist for many reasons unrelated to the operation of markets in food. But improvements in technology can make it feasible to reduce wastage at little cost.]
  • “If we keep lifting average yields toward the demonstrated levels …, stop feeding corn to cars [corn ethanol – another activity subsidized by government], restrain our diets lightly, and reduce waste, then an area the size of India or the USA east of the Mississippi could be released globally from agriculture over the next 50 years or so.“
  • Land released from agriculture contributes to reforestation, a process that is underway in a number of countries. “In the USA, the forest transition began around 1900, when states such as Connecticut had almost no forest, and now encompasses dozens of states. The thick green cover of New England, Pennsylvania, and New York today would be unrecognizable to Teddy Roosevelt, who knew them as wheat fields, pastures mown by sheep, and hillsides denuded by logging.“
  • Our demand for forest products is in decline, which also contributes to reforestation. Forest plantations (accounting for about 1/3 of wood production) are much more productive than harvesting wood from natural forests. Land devoted to wood plantations can displace the harvesting of a much larger area of natural forest. 
  • Carbon dioxide (as well as nitrogen) is adding to “global greening“, which according to Ausubel is “the most important ecological trend on Earth today. The biosphere on land is getting bigger, year by year, by 2 billion tons or even more.” [Importantly, this greening provides an important offset to any tendency for human greenhouse gas emissions to warm the environment.]
  • “Dematerialization”: After the 1970s “…a surprising thing happened, even as our population kept growing. The intensity of use of the resources began to fall. For each new dollar in the economy, we used less copper and steel than we had used before.” Ausubel and some colleagues studied the use of 100 commodities in the U.S. over time. “… we found that 36 have peaked in absolute use; … Good riddance to asbestos and cadmium. … 53 commodities we consider poised to fall. These include not only cropland and nitrogen, … but even electricity and water…. Only 11 of the 100 commodities are still growing in both relative and absolute use in America.“
  • Ausubel shows that certain emissions in the U.S. have decreased in relative terms, and sometimes in absolute terms. [The latter were mostly induced by public demands for pollution control regulation, but relative declines also reflect the ability of the private economy to generate growth. However, the value of certain regulations is questionable from both a public finance and a public health perspective.]
  • He is very high on maglev technology and especially the “hyperloop”, Elon Musk’s proposed tube for high-speed maglev travel between LA and San Francisco. [I do not share his enthusiasm for some of the reasons discussed in “High-Speed Third Rail For Taxpayers“. Large-scale, publicly-subsidized infrastructure projects often fail in terms of costs vs. benefits. However, the economics of the hyperloop might prove more compelling.]
  • Fertility has been in decline throughout the world for decades. Slower population growth obviously complements technological advance in providing for material human welfare.
  • Oceans and aquatic life are an area of real concern, in Ausubel’s view. “Fish biomass in intensively exploited fisheries appears to be about one-tenth the level of the fish in those seas a few decades or hundred [of] years ago.” [This is a classic tragedy of the commons in which no property rights are defined until the catch is in.] Fish farming is a promising alternative that can reduce the strain on wild fish populations. 
  • A final section on potential changes in the human diet is provocative. Ausubel discusses the promise of hydrogen supplies in creating proteins for our diet. “A single spherical fermenter of 100 yards diameter could produce the primary food for the 30 million inhabitants of Mexico City. The foods would, of course, be formatted before arriving at the consumer. Grimacing gourmets should observe that our most sophisticated foods, such as cheese and wine, are the product of sophisticated elaboration by microorganisms of simple feedstocks such as milk and grape juice. … Globally, such a food system would allow humanity to release 90 percent of the land and sea now exploited for food.“

In concluding his monograph, Ausubel addresses whether his optimism is misplaced, having focused so much on positive trends in the developed world and relatively little on less developed countries. Here is his response:

“My view is that the patterns described are not exceptional to the US and that within a few decades, the same patterns, already evident in Europe and Japan, will be evident in many more places.“

None of this is to deny the existence of external costs and benefits to the natural environment, which private parties might ignore in cases of ill-defined property rights or difficulties in litigating damages. Regulation may be a reasonable alternative for internalizing obvious external costs and benefits, but even then, markets can play a valuable role in fashioning the most efficient regulatory approach. In fact, with advances in environmental consciousness, private parties often find it in their best interest to internalize obvious external costs.

Having achieved a sufficient level of prosperity, a society may decide to convert some of the gains into public benefits through various forms of regulation or other public initiatives. In essence, these may be characterized as “luxury public goods”. The danger lies in the mistakes government often makes in the imposition of costly measures, and in allowing excessive taxes and regulation to subvert the very market processes giving rise to prosperity. This is particularly dangerous to welfare and growth in the underdeveloped world, as illustrated by opposition from environmentalists to efficient fossil fuels. That leaves the poor no alternative but to continue to burn wood indoors for heating and cooking.

It’s worth emphasizing that the nature rebound already taking place in the developed world is largely a product of free market capitalism and the growth in wealth and technology they have made possible. A great benefit of secure property rights for society, and for the environment, is that owners have powerful incentives to husband their resources. Likewise, the profit motive gives producers strong incentives to reduce waste and improve productivity. As economic development becomes more widespread, these incentives are promoting a healthier balance between man and nature. Greenies: capitalism can be your friend!

Will ET Be a Socialist?

19 Wednesday Aug 2015

Posted by in Capitalism, Socialism, Space Travel

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If we are ever visited or contacted by agents from an extraterrestrial civilization, what kind of society will they come from? The issue is given scant attention, if any, in discussions of extraterrestrial life, at least according to this interesting piece in The Freeman by B.K. Marcus. The popular view, and that of many scientists, seems to be that the alien society will be dominated by an authoritarian central government. Must that be the case? Marcus notes the negative views taken by such scientific authorities as Neil deGrasse Tyson toward laissez faire capitalism, and even Carl Sagan “… could only imagine science funded by government.” Of course, Tyson and Sagan cannot be regarded as authorities on economic affairs. However, I admit that I have fallen into the same trap regarding extraterrestrial visitors: that they will come from a socialist society with strong central command. On reflection, like Marcus, I do not think this view is justified.

One explanation for the default view that extraterrestrial visitors will be socialists is that people uncritically accept the notion that an advanced society is a planned society.  This runs counter to mankind’s experience over the past few centuries: individual freedom, unfettered trade, capitalism and a spontaneous social order have created wealth and advancement beyond the wildest dreams of earlier monarchs. Anyone with a passing familiarity with data on world economic growth, or with F.A. Hayek, should know this, but it Is often overlooked. Central planners cannot know the infinitely detailed and dynamic information on technologies, resource availability, costs and preferences needed to plan a society with anything close to the success of one arranged through the voluntary cooperation of individual actors.

Many of us have a strong memory of government domination of space exploration, so we tend to think of such efforts as the natural province of government. Private contractors were heavily involved in those efforts, but the funding and high-level management of space missions (NASA in the U.S.) was dominated by government. Today, private space exploration is a growth industry, and it is likely that some of the greatest innovations and future space endeavors will originate in the private sector.

Another explanation for the popular view is the daunting social challenges that would be faced by crews in interstellar travel (IST). Given a relatively short life span, a colonizing mission would have to involve families and perhaps take multiple generations to reach its destination. There is a view that the mini-society on such a ship would require a command and control structure. Perhaps, but private property rights and a certain level of democratization would be advantageous. In any case, that carries no implication about the society on the home planet nor the eventual structure of a colony.

A better rationale for the default view of socialist ETs involves a public goods argument. The earth and mankind face infrequent but potentially catastrophic hazards, such as rogue asteroids and regions of strong radiation as the sun orbits the center of the Milky Way galaxy. These risks are shared, which implies that technological efforts to avert such hazards, or to perpetuate mankind by colonizing other worlds, are pure public goods. That means government has a classic role in providing for such efforts, as long as the expected benefits outweigh the costs. The standard production tradeoff discussed in introductory economics classes is “guns versus butter”, or national defense (a pure public good) versus private consumption. IST by an alien civilization could well require such a massive diversion of resources to the public sector that only an economically dominant central government could manage it. Or so it might seem.

As already noted, private entrepreneurs have debunked the presumed necessity that government must dominate space exploration. In fact, Elon Musk and his company SpaceX hope to colonize Mars. His motives sound altruistic, and in some sense the project sounds like the private provision of a public good. Here is an interpretation by Tim Urban quoted at the link (where I have inserted a substitute for the small time-scale analog used by the author):

“Now—if you owned a hard drive with an extraordinarily important Excel doc on it, and you knew that the hard drive pretty reliably tended to crash [from time to time] … what’s the very obvious thing you’d do?
You’d copy the document onto a second hard drive.
That’s why Elon Musk wants to put a million people on Mars.”

Musk has other incentives, however. The technology needed to colonize Mars will also pay handsome dividends in space mining applications. Moreover, if they are successful, there will come a time when Mars is a destination commanding a fare. Granted, this is not IST, but as technology advances through inter-planetary travel and colonization, there is a strong likelihood that future Elon Musks will be involved in the first steps outside of our solar system.

While SpaceX has raised its capital from private sources, it receives significant revenue from government contracts, so there is a level of dependence on public space initiatives. However, the argument made by Marcus at the first link above, that IST by ETs is less likely (or impossible) if they live under a socialist regime, is not based primarily on recent experience with private entrepreneurial efforts like Musk’s. Instead, it has to do with the inability of socialist regimes to generate wealth, especially the massive wealth necessary to accomplish IST.

Discussions of ETs (or the lack thereof) often center around a question known as the  Fermi Paradox, after the physicist Enrico Fermi. He basically asked: if the billions and billions of star systems, even in our own galaxy, are likely to harbor a respectable number of advanced civilizations, where are they? Why haven’t we heard from them? My friend John Crawford objects that this is no paradox at all, given the vastness of space and the difficulty and likely expense of IST. There may be advanced civilizations in the cosmos that simply have not been able to tackle the problem, at least beyond their own stellar neighborhood. No doubt about it, IST is hard!

I have argued to Crawford that there should be civilizations covering a wide range of development at any point in time. In only the past hundred years, humans have increased the speed at which they travel from less than 50 miles per hour (mph) to at least 9,600 mph. The speed of light is approximately 270,000 times faster that that! At our current top speed, it would take almost 50% longer to reach our nearest neighboring star, Alpha Centauri, than the entire span of human existence to-date. With that kind of limitation, there is no paradox at all! But I would not be surprised if, over the next 1,000 years, advances in propulsion technology bring our top speed to within one-tenth of the speed of light, and perhaps much more, making IST a more reasonable proposition, at least in our “neighborhood”. There may be civilizations that have already done so.

Answers to the Fermi Paradox often involve a concept called the Great Filter. This excellent HuffPo article by Tim Urban on the Fermi Paradox provides a good survey of theories on the Great Filter. The idea is that there are significant factors that prevent civilizations from advancing beyond certain points. Some of these are of natural origin, such as asteroids and radiation exposure. Others might be self-inflicted, such as a thermonuclear catastrophe or some other kind of technology gone bad. Some have suggested that the Large Hadron Collider in Switzerland could be a major hazard to our existence, though physicists insist otherwise. Another example is the singularity, when artificial intelligence overtakes human intelligence, creating a possibility that evil machines will do us in. The point of these examples is that some sudden or gradual development could prevent a civilization from surviving indefinitely. These kinds of filters provide an explanation for the Fermi Paradox.

More broadly, there could be less cataclysmic impediments to development that prevent a society from ever reaching an advanced stage. These would also qualify as filters of a sort. Perhaps the smart ETs lack, or failed to evolve, certain physical characteristics that are crucial for advancement or IST. Or their home planet might be light on certain kinds of resources. Or perhaps an inferior form of social organization has limited development, with inadequate wealth creation and technologies to transcend the physical limitations imposed by their world. On a smaller than planetary scale, we have witnessed such an impediment in action many times over: socialism. The inefficiencies of central planning place limits on economic growth, and while high authorities might dictate a massive dedication of resources toward science, technology and capital-intensive space initiatives, the shift away from personal consumption would come at a greater and greater cost. The end game may involve a collapse of production and a primitive existence. So the effort may be unsustainable and could lead to social upheaval; a more enlightened regime would attempt to move the society toward a more benign allocation of resources. Whether they can ever accomplish IST is at least contingent on their ability to create wealth.

Socialism is a filter on the advancement of societies. ETs capable of interstellar travel could not be spawned by a society dominated by socialism and central planning. While government might play a significant role in a successful ET civilization, one capable of IST, only a heavy reliance on free-market capitalism can improve the odds of advancing beyond a certain primitive state. Capitalism is a relatively easy ticket to the wealth required for an advanced and durable civilization, and conceivably to the reaches of the firmament.

Unfortunately, there is absolutely no guarantee that capitalistic ETs will be friendly  toward competing species, or that they will respect our property rights. They might be big, smart cats and find us mouse-like and quite tasty. Their children might make us perform circuses, like fleas. In any case, if ETs get this far, it’s probably because they want our world and our resources. My friend Crawford says that they won’t get here in any case. He believes that the difficulty of IST will force them to focus on their own neighborhood. Maybe, but on long enough time scales, who knows?

I would add a caveat to conclusions about the strength of the filters discussed above. A capitalistic society might reach a point at which it could send artificially intelligent, self-replicating machines into space to harvest resources. Those machines might well survive beyond the end of the civilization that created them. Conceivably, those machines could act autonomously or they could take coordinated action. But we haven’t heard from them either!

For a little more reading, here is SETI‘s description of the Fermi Paradox, and here is a post from io9 on the Great Filter.